Cable Television Act of 1992

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MM Docket Nos. 92-266 and 93-215, FCC 94-234]

Cable Television Act of 1992

agency: Federal Communications Commission.

Action: Further notice of proposed rulemaking.

-----------------------------------------------------------------------

summary: This further notice of proposed rulemaking is one segment of

the Fifth Order on Reconsideration and Further Notice of Proposed

Rulemaking in this proceeding. The final rules adopted in this decision

may be found elsewhere in this issue. In the Further Notice Proposed

Rulemaking, the Commission sought comment on possible alternative

definitions for small cable operators, independent small cable systems,

and small cable systems owned by small multiple system operators. The

Commission also sought comment on whether to retain current definitions

or use different definitions for purposes of establishing special rate

or administrative treatment for small operators and small multiple

system operators. The Commission specifically seeks comment on these

issues in light of Section 3(a) of the Small Business Act, and on

whether the Commission should employ the current Small Business

Administration definition of a small cable company in the cable rules.

A change in the definitions of these categories of cable operators may

affect eligibility under any final rules which the Commission may adopt

pertaining to small cable systems.

dates: Comments are due on or before November 16, 1994 and reply

comments are due on or before December 16, 1994.

addresses: Comments and reply comments should be sent to Federal

Communications Commission, 1919 M Street NW., Washington, DC 20554.

for further information contact: Susan Cosentino, (202) 416-0800.

supplementary information: This is the proposed rules segment of the

Commission's Fifth Order on Reconsideration and Further Notice of

Proposed Rulemaking in MM Docket No. 92-266 and MM Docket No. 93-215,

FCC 94-234, adopted September 12, 1994 and released September 26, 1994.

The complete text of this document is available for inspection and

copying during normal business hours in the FCC Reference Center (room

239), 1919 M Street, NW., Washington, DC, and also may be purchased

from the Commission's copy contractor, International Transcription

Service at (202) 857-3800, 2100 M Street, NW., Suite 140, Washington,

DC 20037.

Further Notice of Proposed Rulemaking

Background

In 1992, Congress amended Sec. 3(a) of the Small Business Act to

require federal agencies to use small business definitions created by

the Small Business Administration (``SBA''), or in the alternative,

seek public comment on different definitions and obtain the approval of

the Small Business Administrator with regard to any regulation

applicable to small businesses, unless other statutory definitions are

applicable. SBA rules currently define a small cable company as one

with $11 million or less in gross revenues. The Cable Television

Consumer Protection and Competition Act of 1992 defined a small cable

system as one with 1,000 or fewer subscribers. A small cable operator

is defined as one with 15,000 or fewer subscribers that is not

affiliated with a larger operator. In addition, a small multiple system

operator (``MSO'') is one serving 250,000 or fewer total subscribers

that owns only systems with less than 10,000 subscribers each and has

an average system size of 1,000 or fewer subscribers. In this

rulemaking, the SBA's Office of Advocacy and the Small Cable Business

Association have expressed concern about the Commission's definitions

of small operators eligible for transition relief and our definition of

small MSOs. Specifically, the SBA's Office of Advocacy and the Small

Cable Business Association believe the current definitions in our rules

defining eligibility for transition and administrative relief are under

inclusive and were promulgated in violation of Sec. 3(a) of the Small

Business Act. They urge us to re-evaluate the definitions and seek

public input before deciding on permanent standards.

The Chief Counsel of the SBA's Office of Advocacy has urged the

Commission to explore a full range of burden-reducing regulatory

options in our rate proceedings. We are in full agreement with that

suggestion. Based on the existing record, however, we are not persuaded

that the actions taken to date to ease the regulatory difficulties

faced by smaller operators have been undertaken in violation of the

law. Specifically, the Commission does not believe that Small Business

Administration size standards, to which federal agencies may be

required to adhere under Section 3 of the Small Business Act, are

applicable to the Commission's definitions of small cable operators and

small cable systems developed in the Second Order on Reconsideration,

Fourth Report and Order, and Fifth Notice of Proposed Rulemaking MM

Docket No. 92-266. For example, Section 3(a) of the Small Business Act

provides that SBA size standards apply for the purposes of all

legislation, unless the legislation specifically authorizes different

size standards. The Cable Television Consumer Protection and

Competition Act of 1992 (``1992 Cable Act'') in fact contains a size

definition of a small system as one with 1,000 or fewer subscribers.

See 47 U.S.C. Sec. 543(i). Specifically, the statute requires the

Commission to develop cable rate regulations that reduce cost and

administrative burdens for such ``small systems.'' Given the statute's

small system definition of 1,000 or fewer subscribers, Section 3(a) of

the Small Business Act is inapplicable. The Commission has implemented

the statutory provision regarding small system relief in a more

flexible manner than is explicitly mandated by the 1992 Cable Act and

is now considering further flexibility through extending relief to

additional systems. But this does not alter the fact that the

Commission is implementing a statute with an explicit small business

standard. Additionally, the Small Business Act defines small-business

concerns as one ``which is not dominant in its field of operation.'' 15

U.S.C. Sec. 632(a)(1). Cable systems subject to rate regulation,

regardless of whether they are large or small, are by definition

dominant in their field of operation because they do not face effective

competition. Thus, Section 3(a) of the Small Business Act also does not

apply because regulated cable systems do not meet the definition of a

small business concern.

Discussion

We established transition treatment for small operators pending

completion of our cost studies, and have established administrative

relief for independent small systems and small systems owned by small

multiple system operators (``MSOs''). Under our interim cost-of-service

rules, independent small systems and small systems owned by small MSOs

also may use special forms for cost-of-service showings. When cost

studies are completed, we may make permanent, eliminate, or modify our

transition rate treatment of small operators. When we develop average

equipment cost schedules, we may terminate or modify our provisions for

streamlined rate reductions for independent small systems and small

systems owned by small MSOs. In our final cost proceeding, we may

modify our requirements for cost showings by independent small systems

and small systems owned by small MSOs.

We believe that it would establish a more complete record for

purposes of promulgating final rate rules applicable to small

operators, independent small systems, and small systems owned by small

MSOs if we obtain comment on possible alternative definitions that we

could use for purposes of determining eligibility for special rate or

administrative treatment provisions that could apply to small

businesses. We are initiating the instant Further Notice of Proposed

Rulemaking for purposes of obtaining this comment.

Accordingly, we solicit comment on whether we should retain current

definitions or use different definitions for purposes of establishing

special rate or administrative treatment for small operators and small

MSOs that could be small businesses. We specifically seek comment on

these issues in light of Section 3(a) of the Small Business Act, and on

whether we should employ the current SBA definition of a small cable

company in our cable rules.

Administrative Matters

Initial Regulatory Flexibility Analysis

Pursuant to Section 603 of the Regulatory Flexibility Act, the

Commission has prepared the following initial regulatory flexibility

analysis (IRFA) of the expected impact of these proposed policies and

rules on small entities. Written public comments are requested on the

IRFA. These comments must be filed in accordance with the same filing

deadlines as comments on the rest of the Notice, but they must have a

separate and distinct heading designating them as responses to the

regulatory flexibility analysis. The Secretary shall cause a copy of

the Notice, including the initial regulatory flexibility analysis, to

be sent to the Chief Counsel for Advocacy of the Small Business

Administration in accordance with Section 603(a) of the Regulatory

Flexibility Act, Pub. L. No. 96-354, 94 Stat. 1164, 5 U.S.C. Section

601 et seq. (1981).

Reason for action. The Cable Television Consumer Protection and

Competition Act of 1992 requires the Commission to prescribe rules and

regulations for determining reasonable rates for basic tier cable

service and to establish criteria for identifying unreasonable rates

for cable programming services. The Commission has adopted rate

regulations that require a comparison to the rates of cable systems

subject to effective competition, as defined in the Cable Act of 1992

and represented in the revised benchmark formula. This Notice proposes

to review and determine appropriate definitions of small systems, small

operators, and small MSOs for the purpose of determining rate

regulation applicable to these categories of companies.

Objectives. To propose rules to implement Section 3 of the Cable

Television Consumer Protection and Competition Act of 1992. We also

desire to adopt rules that will be easily interpreted and readily

applicable and, whenever possible, minimize the regulatory burden on

affected parties.

Legal Basis. Action as proposed for this rulemaking is contained in

Sections 4(i), 4(j), 303(r) and 623 of the Communications Act of 1934,

as amended.

Description, potential impact and number of small entities

affected. We anticipate a possible impact on small entities because the

Notice addresses the definitions of small systems, small operators and

small MSOs for use in determining rate rules affecting these classes of

cable operators.

Reporting, recordkeeping and other compliance requirements. None.

Federal rules which overlap, duplicate or conflict with this rule.

None.

Any significant alternatives minimizing impact on small entities

and consistent with stated objectives. None.

Paperwork Reduction Act

The requirements adopted herein have been analyzed with respect to

the Paperwork Reduction Act of 1980 and found to impose no new or

modified information collection requirements on the public.

Procedural Provisions

Ex parte Rules--Non Restricted Proceeding. This is a non-restricted

notice and comment rulemaking proceeding. Ex parte presentations are

permitted, except during the Sunshine Agenda period, provided that they

are disclosed as provided in Commission rules. See generally 47 CFR

1.1202, 1.1203, and 1.1206(a).

Pursuant to applicable procedures set forth in Secs. 1.415 and

1.419 of the Commission's Rules, 47 CFR 1.415 and 1.419, interested

parties may file comments on or before November 16, 1993 and reply

comments on or before December 16, 1994. To file formally in this

proceeding, you must file an original plus four copies of all comments,

reply comments, and supporting comments. If you want each Commissioner

to receive a personal copy of your comments and reply comments, you

must file an original plus nine copes. You should send comments and

reply comments to Office of the Secretary, Federal Communications

Commission, 1919 M Street, NW., Washington, DC 20554. Comments and

reply comments will be available for public inspection during regular

business hours in the FCC Reference Center, Room 239, Federal

Communications Commission, 1919 M Street NW., Washington DC 20554.

Ordering Clauses

Authority for this Further Notice of Proposed Rulemaking is

contained in sections 4(i), U.S.C. 154(i), 154(j), 303(r), 532(c) and

543.

It is ordered That, pursuant to Sections 4(i), 4(j), 303(r),

612(c), 622(c) and 623 of the Communications Act of 1934, 47 U.S.C.

Secs. 154(i), 154(j), 303(r), 532(c), 542(c), and 543, Notice is hereby

given of proposed amendments to Part 76, in accordance with the

proposals, discussions, and statement of issues in this Further Notice

of Proposed Rulemaking, and that Comment is Sought regarding such

proposals, discussion, and statement of issues.

List of Subjects in 47 CFR Part 76

Cable television.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 94-25022 Filed 10-12-94; 8:45 am]

BILLING CODE 6712-01-M